♪ ♪ imus in the morning ♪ >> deja vu all over again. the president starts his second term just like he started the first. good morning, everyone, the left marches into the white house today unions and activist groups demanding the spoils of their

election win. president obama is laying the table with confrontation with republicans over taxing and spending, move on richard trumka, he meets the left first. and still on the big negotiation, there's another warning on debt today. moody's says get a real deal and get a grip on debt or america will be downgraded. all right, you know the name, mack afee, he's on the run. the man who vote anti-virus software is a person of interest on the murder of his neighbor in belize. watch out, microsoft shareholders, i'm one, your stock getting killed. "varney & company" about to begin.

and waiting in line. i don't have to leave my desk and get up and go to the st office anymore. you can print real u.s. postage for all yo letters and packages. it gives you the exact amount of postage you need the instant you need it. can you print only stamps? no. first class. priority mail. certified. international. and the mailmapicks it up. i don't leave the shop anymore. [ male announcer ] get a 4-week trial plus $100 in extras including postage and a digital scale. go to stamps.com/tv and never go to the post office again. >> all right. today is back to workday in washington. president obama has his first big meeting on the fiscal cliff since his reelection. and who is he meeting with? union leaders and far left activists. we're scrolling their names on the side of the screen, but you

can see richard trumka is there along with the heads of every major union, richard trumka who said this after the president's victory last week. >> it's strongly believed that we should make sure the wealthy should pay their fair share of taxes. they believe we should protect medicare and medicaid and social security benefits from cuts. and voters reject the idea that bringing down the federal budget deficit is an overriding priority. >> all right. tax the rich, keep spending and don't worry about the deficit. that's the man who has the president's ear on the first day of fiscal cliff talks. tomorrow, a group of ceo's for the white house for a meeting none of them, none of them from wall street. the president also holds a news conference tomorrow afternoon. now, it won't be until friday that he'll finally get together with congressional leaders, the people who havv to make the deal to avoid the fiscal cliff and everybody that passes, we get close, every day that passes we

get closer to huge tax increases and budget cuts. and now, we've got moody's, warning that the u.s. not only has to make a deal, but a good deal, or another debt downgrade is possible and moody's seems to doubt whether our elected leaders can actually do it. chime in on facebook, please, should the president be meeting with union leaders, the first meeting he holds, the far left, really? weigh in, please, facebook, 24/7. we want to show you microsoft stock pre-market and two big stories are affecting the stock this morning and right now trading way down ahead of the opening bell. why is that? because the executive who was expected to be next in line to lead the company after steve ballmer has left suddenly. and steve sinonsky, windows 8 unveiled next week, is his quitting a signal it's not successful? and video game halo 4, 220

million, one game, one day, not enough to make up for sinofsky's leaving. we'll follow this throughout the program. and remember, i do own some microsoft stock. coming up next, the opening bell this tuesday morning, we're going to be down. having y ship my gifts couldn't be easier. well, having a ton of locations doesn't hurt. and my daughter loves the santa.

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>> one week after the election, it looks like the market will open lower again this tuesday morning. probably down about 80, maybe 90 points in the very early going and that means that the dow is off roughly 500 points since election day of the what's the problem? a lot of people do not like what they see coming up in the second obama term. especially the tax rate on dividends go up and a lot of pairs go down. to the big board, a sea of red ink, i can see it now. down 35 points in a matter of seconds and likely going to a loss of 80, 90 points, we've got home depot, i'm going to call that an economic indicator and they reported better than expected profits. and so give a bright spot. >> stuart, it's looking pretty good here. up about 2%, when you talk about home depot, it's directly, definitely, an economic indicator because it's directly di tied to a housing market and up tick in housing market they say

helped home depot. they've raised their full year outlook and the last thing i will mention is preparation for hurricane sandy and may give them a small sales gain going forward. stuart: i do want to check microsoft not just because i own it, but because that thing is way down today. their top guy, the windows division guy is leaving, suddenly unexpectedly and that's bad news for the corporate suite at microsoft, they're in disarray, down they go, down more than a buck. president obama, now he's kicking off a series of meetings this week with labor unions, business owners and then, he'll talk with congress, talking about the fiscal cliff. i'm going to say this is deja vu all over again and reminds me how he started off in the first term. joining me now is mary anne marsh, always a pleasure, welcome back. >> hello, stuart. >> he's starting out the same way that he started back in the first term. that would be raise taxes, spend a lot of money, and the debt is run up.

now, i know you're laughing, but look, investors are looking at this and they're saying, wait a second. this is not going to give us real growth. and this president is trying to punish the rich, punish success, and they don't like it. why are you so much in favor of it? >> i think he's trying to fix the problems and i think the blueprint is what clinton did when he was president in the second term and created 23 million jobs, slashed the deficit and created the largest surplus in history. it's the same blueprint. and that's what's going to happen now because that's what president obama was reelected, why democrats picked up seats in the house and why so many republicans, majority of republicans in congress now have not signed the grover norquist pledge and even those who have may not honor it. so that tells you everything. stuart: look, i think you're right. i think we're going to end up with higher tax rates on people making, probably 500,000 or a million dollars a year, i think that tax rates there. >> probably. stuart: could go up. >> yeah. stuart: but tell me how you get

serious growth in the economy with this set of policies that the president's laid out? how do you get 4, 5, 6% growth? how do you get there with this? >> because you just can't raise taxes and you just can't cut. you also have to make investments and tackle the deficit. you have to do all four. no one thing is going to fix this mess and everybody knows that. >> okay, look. >> yes. >> are you going to tell me, are you going to smell out the economics of it. that you raise taxes and you raise spending on education infrastructure and that you think that will give us 4 or 5% growth. really? >> no, and we're going to make cuts and we're going to tackle the deficit. >> going to promise to make cuts down the road. the president has not said. has not laid out any plans to reform entitlements, i mean, change their structure. he's just going to keep on paying. >> stuart, not yet. i mean, that's why there are negotiations and frankly, the democrats have a much stronger hand than they had in 2010, 2011

and the republicans know that and there's a reason that people stood in line for eight hours to vote. because their voices had not been heard and that they want their voices heard, which is why the campaign hasn't ended. i think one of the mistakes in the first it term of the obama administration, they had a great grass roots organization that got him elected, but you needed to put them to work to get legislatures passed and i think that's what you're going to see in the beginning of the second term and it's exactly the right thing to do because you don't run for office just to win, you do it to get things done and that's what has to happen. don't we want growth. after all we want growth. >> and we had no better growth than under bill clinton and that's what we're going back to. that works. >> that was a totally different economy. and the growth. >> how so? >> completely different. we wouldn't go into bill clinton's term of office with a trillion dollars a year worth of deficits. we didn't go into bill clinton's first term of office with government taking 24% gdp, we didn't do that. >> wait, wait we-- we inherited. stuart: i don't want to rewrite

economic history i'm not going to let do you that. we took off-- america took off after newt gingrich and the republicans took control of congress in 1994, when the people, the economy could be assured that it would not be rash and outrageous spending. he stopped that and that's when the economy took off. and that's, by the way, that is when bill clinton actually lowered the rate on capital gains taxes. >> and raised taxes for-- on other income earners, so, here is what history will tell us, that it takes a democrat to clean up after a president named burn. we saw that with clinton after bush 41 we're going to see that with obama now and that's what his second term is going to look like, a lot more like the second term of bill clinton versus any term by any president named bush. that's the difference. stuart: you're going to guarantee 4 or 5% growth next year or 2014. you think we're going to get this. >> i'm not an economist thank god. here is the reality if they cut the deal and taxes on the upper

income earners, cut the deficit and make the right investments, i think all of that's going to happen and history shows us that because bill clinton was able to do it, barack obama can do it. and he just needs the republicans to cooperate. stuart: not only does the market tell us it's not going to happen, but economists tell us. not one economist i know, not one, even the far left, you can go to paul krugman, for heavens sake, he's not going to say you're going to get 4 or 5% growth with this set of policies. no one is saying. >> i think any growth at this point is progress given what we've gone through, okay. stuart: no, no, no. >> yes. stuart: if you want to make progress on the deficit the only way to make serious progress on the deficit is to grow the economy. you've got to have serious growth. not 2%. that's, that doesn't do it. it's got to be 4, 5, 6%. >> you've the got to put people back to work, put people back to work, got to make investments and cuts and yes, you have to raise some taxes got to do it all. stuart: no point in arguing this. you think that we're going to

get 4 or 5% growth next year or the year after that? >> i don't have. i don't have a number for you, but i do know what bill clinton was able to do we had one of the greatest economies ever and we need to do the same thing again. stuart: different-- >> what they've gone doing under republicans did not. stuart: bill clinton did not start out with a trillion dollars worth of deficits. at the time it was the highest deficit we'd ever had. stuart: nowhere near the proportion of gdp we have now. >> we have much bigger problems and they require much bigger solutions, and everyone's got-- everyone here and that's why this election turned out wait it did. stuart: the r here is where i want to leave it. i've got something to say and you can counter it. this president, president obama wants to punish the rich. he doesn't like that, no? >> absolutely not. he wants fairness because a lot of people in this country knew the deck was stacked against them and then they saw people like mitt romney who maybe, maybe paid 15%, probably paid less than that. they want everyone to pay their

fair share. and this is about fairness. stuart: 1% of the population pays 40% of all the taxes raised, half the population pays nothing and that is fair? i don't think so. mary anne, always a pleasure. >> i think. stuart: always a pleasure. >> all right, stuart, thank you. stuart: come and see us, thank you. the names are already being thrown around. president obama's cabinet is likely to get some new faces over the next few months. leon panetta, hillary clinton likely to leave. new at 10, you'll never guess the two people that could take their places. that will be at the top of the hour. new at 10. and investigations into general david petraeus's alleged affair continue to get bigger and much more complicated. general john allen, who was in line to become top commander in afghanistan, allegedly had his own improper communications with a woman named gel kejill kelly.

why would that be, nicole? >> hi, we're looking at facebook at all of my tourists pass through. and looking at facebook, you remember the ipo in may. a $38 stock and barely holding the $20 line now, and it's to the down side this morning. and now when we're looking into the company, it turns out the shares are so heavily diluted. massively diluted because of the insiders compensation, to common shareholders, and obviously, that's everybody, but employees and executives, and when those expire and they're selling also

calls the company and according to the wall street journal take facebook mid 2013 to at least earn enough operating income just to offset the annual stock compensation costs. now what that means, not good news. >> the not good news. down 20 bucks again. thank you. time is money, 30 seconds, what else we're watching for you today. the u.s. is sitting on enough natural gas to become a world energy leader if we can use fracking to get at it. and where does the obama administration stand on fracking. is america becoming an entitlement society? and the fiscal cliff coming up the end of the year, i think there will be a deal to avoid it. what will be in that deal, that will be my take for today. tuesday morning, seven early movers, here we go. positive test results for oxy gene's treatment. the cornerstone on demand took

in more than expected. it's up. and oil service, the outlook disappointing down it goes. host hotels and resorts cut the full year profit outlook, down it goes. o'reilly automotive buying back more shares, up a little. two big names you know, xerox plans to raise its dividend next year and it's up 6.51 for xerox and better than expected profit at home depot up $2. nice moves. dow is down 29. didn't go down the 80 or 90 expected looking into the futures, we're down 30 points as of right now, but puts us back at 12-7. apple stock is down more than 20%, is apple's run over? some say yes, it is. [ male announcer ] atcottrade,

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>> you know the dliep decline of the dow at the opening bell expected 80 points lower, it didn't go down, why was that? i'll tell you, goldman sachs chief lloyd blankfein says he would be shocked if the threat of the fiscal cliff is not resolved. in other words, he thinks there's going to be a deal and suspect that any deal means business knows what it has to deal with and that removes some uncertainty. so, the dow's decline halted and we're the 12-8 barely lower today. i want you to take a look at a chart from apple stock, a far cry from earlier in the year, just over $700 a share. joining the company now from los angeles is gil morales, and welcome back. you're a trader, you don't care

the fundamentals, whether it's in or out and samsung is making progress. >> no. stuart: if you look at the chart would you be buying apple now that it's down 20% from the high in a couple of months? >> well, to be honest, i'm actually short the stock and i have been short the stock since around the 700 level when it violated-- or not able to clear the 700 level and violated the 50-day moving average at around 650 and most recently blown through the 200-day moving average around 596 right now. so, to us, those are technical-- we've been shorting it all the way down. you're at a point now, even the apples bulls, actually apple bears are getting bullish on the stock making it cheap and you could get a reaction bounce back up to the 200-day moving average just under 600 so we're kind of watching that right now to see if we want to cover our position, but i think the stock has topped and probably going lower longer term. >> i asked the question because in previous years, all the way from 2005, all the way up through early 2012, whenever the

stock took a dip, if you bought it you'd do well. because that thing bounced back up and another new high. >> right. >> but you're telling me that the the ball game has changed and that high, 703, 705, whatever it was, was the high, that's the top. no bounce back to that level. is that what you're saying? >> we don't see that occurring and one of the main things -- you talk about the long-term move in apple and in fact, a leader since the market low in march of 2009 and we're now 45 months into a bull run. since then, every time apple has come down to the 200-day moving average, it's found support it and done that each time it's come down to that level on the way up, since the early 2009. noi, what's different this time is now it's 8% below that 200-day moving average. sos, that's a very critical moving average because institutions who own apple stock will tend to come in and support the stock at that level and what we saw happening, we're dumping the stock. you see a lot of big funds have owned the stock since 2004 when it started its move have been studily unloading the stock, i

think it's under distribution and will continue to do so. >> that might be more with the future taxation of dividends, i'm sorry, the future taxation of capital gains as opposed to some movement within the charts. because if you sell off apple stock now, and you've made a big gain in the past. >> right. >> then you'd pay what, 15% capital gains tax, if you sell it next year, probably pay 20% or maybe more? >> that's true. and that's probably one factor, but i've also seen the distribution in the stock occurring several months earlier so the market was telling you about this, i think, much earlier. and wet, notice that apple had a very low p.e. 13, 14 times earnings for about the last two years and what struck me three quarters ago, the stock growing earnings at 92%, but still selling at 13 times earnings and you have to ask yourself, why does the market value apple's future earnings stream so poorly. well, now we find out in the most recent quarter, the projections for next quarter are negative 2% growth so now you're paying about 11 times earnings for a company that's going to

grow earnings by negative 2%, so, now that's maybe actually expensive. i think that's a factor, the law of large numbers is working against the company. stuart: everybody is watching apple. it's been the stock, three or four years. >> so am i. >> and everybody watches it. gill, always a pleasure. 9:50 precisely, are the morning gold report. 1, 723 an ounce, down 7 bucks, listen to this, john mcafee, the founder of mcafee anti-virus is on the run in belize. he's a person of interest in a murder case. drugs, guns, prostitution, all in one story. charles payne, david asman, joining us and talking about it. and here they come. [ male announcer the markets keep moving. make sure the news keeps comi with thinkorswim by td ameritrade. use the news links breaking stories with possible breakout stocks, options with potential opportunity, futur and forex with in-depth analysis.

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>> the man who founded mcafee is a person of interest in a murder case in belize. you know those updates you get on your computer to upgrade your anti-virus software, you've seen them. everybody's seen them. this man, john mcafee started the company. he left it in 1994 and cashed out. took 100 million dollars. he's down to 4 million bucks so we hear and he's living in belize. his neighbor was shot in the head and now, police are questioning or trying to

question mc'fee about it. and they say he's not a suspect at this point. david, you've got a quizzical look on your face. >> he's hiding and spoke to wired magazine from undisclosed location and the fact is why anybody would live in belize is beyond me, i know we're going to get letters from belize and i used to cover it there and it's of all the corrupt and totally bizarre nations in latin america, this has to be-- it's more bizarre than paraguay. stuart: he was a living a bizarre life. >> earlier this year, police came to the town and busted him and took ten firearms, he had a 17-year-old girlfriend there, of course he's been shooting off guns and talk of drug use. ironically i was actually thinking about getting some property there. >> don't do it, charles, trust me, go to coast reek. >> i have a partner there and-- >> coast resta rican has been a

democracy for-- >> there might be a house on the market. >> i bet there is. >> not buying that swamp? got it. let's move on. and the second obama term should mean a cabinet shake-up. guess who may be in line to replace leon panetta as defense secretary and hillary clinton as secretary of state? guess, we'll tell you. and plus, president obama meeting with union leaders and the company weighs in on more of the same in the second term. same old-same old. fromnvesting for the first time... to investing with knowledge. the potential of td ameritrade unlocked. nyse euronext. unlocking the world's potential. >> >> ♪

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unlocking the world's potential. stuart: now at 10:00, could leon panetta be out as defense secretary and hillary clinton out as secretary of state in the second obama term? yeah, probably. according to the washington post, senator john kerry is in line to replace panetta at defense and susan rice could be the next secretary of state. rice, the u.s. ambassador to the united nations who five days after the attack in benghazi went on all the morning shows on sundays and blamed the violence on a movie. we of course know it was a planned terrorist attack. we since learned that the obama administration knew at that point as well. we're talking about that in just a few minutes. first to the big board, we have now turned positive this tuesday morning, up, but not much. up 11. here is our company: david asman joins us.

charles payne is here. nicole petallides on the floor of the new york stock exchange. nicole, start with home depot. now, that's up big, and i want to know why. nicole: home depot is doing really well. the best performer in the dow jones industrials. up over 4 1/2%. they came out with earnings per share and revenue that were better. they have good outlook and said that sandy, the preparations for hurricane sandy and the aftermath, that could help sales also. stuart: nicole, sandy didn't help in the quarter that we're quoting here, the reason why the stock is up, but lit it will -- but it will help the next reporting period. nicole: that's correct. the current quarter is because we saw a pop in housing market. that's why. stuart: winner and loser, different companies. saks is the loser. dick's is the winner. tell me why. nicole: all right. all right. let's talk about why. dick's sporting goods, they have sporting goods, they have top

flight golf balls and golf products. they have done very well. they have raised their full year earnings. third quarter earnings rose. and revenue jumped 11%. great news for dick sporting goods. it's up 3.9%. let's do saks. it is down 3.8%. it is a big loser. they are saying hurricane sandy is hitting their main flagship store right here in new york. and they just said they used words like fiscal cliff, economy, they are worried. they are worried overall. their numbers are not strong. and the holiday quarter sales don't look that great. stuart: how about tax the rich, saks doesn't do very well if you tax the rich, i guess? nicole: you are right on with that. if the rich can't go to the shoe salon, 1022 shoe salon, they are going to send their money to the government. stuart: you've got the name of it? nicole: that's the zip code. stuart: thank you very much nicole. the dow is up 13. the big story today president obama's first big meeting about the fiscal cliff since the

election takes place a little over an hour. and he's meeting with union heads and far left activists, including richard trumka, head of the afl-cio. >> strongly believe that we should make sure that the wealthy start paying their fair share of taxes. they believe that we should protect medicare and medicaid and social security benefits from cuts. and voters reject the idea that brrnging down the federal budget deficit is an overriding priority. stuart: now that's the man who has the ear of the president today. tax the rich, keep spending and ignore the deficit. we're going to run the list of names on the side of the screen of other people who will be at the big meeting today. all right, company, i'm saying, charles, that this is deja vu, all over again. this is how the president started the first term, go straight to the far left. charles: going straight to the far left.

unions represent 8% of private sector workers. to be quite frank, i don't think they should have a seat at this particular table the first place. secondly, this whole thing looks like a rehash of the jobs council. you have ceos of these gigantic corporations, academics, and then you have unions, where are the small businesses? the president keeps dismissing small businesses. he keeps says it's no big deal. it's just 3%. he doesn't understand, how can you connect the dots with gm and say it saved the entire auto industry maybe the country but can't connect the dots the 3% he wants to kick to the curb, doing 50% of the profits, 40% of the hiring. one more point i want to make, october of last year to october of this year, businesses with less than 50 employees created 713,000 jobs. where would the country be without them? stuart: small business did not vote for president obama. david: it's been said the biggest enemy of the free market is not the socialists it is the

corporations. they want the free market for everybody except them. you are right on point here. moveon.org. does anybody out there think that move on.org is a moderating influence in the national debate about taxes and such? i mean, what is he thinking? i guess what you are saying, either one of two things, either this is the way he's going to govern over the next four years or this is just a preliminary payoff to the base that supported him in the election. i know you think this is going to have major influence on the debate as to whether we're going to raise tax rates. you think that's what will happen. i'm praying and hoping that the president will be more moderate than the people that he has invited to this, but it's not a good beginning. stuart: no it's not. why should he be more moderate? david: should and hope are two different things. hoping that he will be. i'm hoping there will be some influence from whatever is left of the mainstream democratic party, if there is any, to push him more towards a moderate. but moveon.org, nothing

moderating about that. stuart: you are right. are we turning into nation of takers instead of makers? nearly half the country accepts some kind of benefit from the government. is america becoming an entitlement society? joining us now is former nba player. also started a youth organization which helps children from disadvantaged backgrounds. all right, lawrence, you have been on our program before. i know your history. you essentially escaped from an entitlement mentality and an entitlement background. i'm not going to ask you how you did it. i'm going to ask you, do you think our analysis is correct, that america has become an entitlement society? >> well, i mean, you can look at -pthe numbers and make that argument. and obviously during these difficult times, a lot of people through no fault of their own had to take some form of entitlement. but i think the issue really comes down to giving the people the tools and resources they need to take control of their own destiny. i think that's something that

the president and this administration has to do. i think the republican party has to find a way to make sure that happens. stuart: i agree. if you constantly up the social spending, if you up thee-- more people on food stamps and unemployment insurance on social security disability more people get the earned income tax credit, if you keep on pushing the money out, you don't release people. you tie them to government. you tie them to entitlement, don't you? i think that's exactly what we're doing now. >> well, i think we've made it a lot easier for people to receive entitlements, so from that standpoint, yes, that would be correct. but how you get them off, i think that's the larger issue here, that's going to be the dilemma of this administration going forward. charles: but lawrence, i don't know if it's the dilemma of the administration or the goal of the administration. it seems to me putting them on it has been their main goal and taking away any sort of shame for, you know, maybe being born and dying on food stamps has been their main goal. >> well, you know, i can't speak

for everyone. i know for me, i hated growing up on welfare. i know every day we had to depend on the government taking care of us. and i hated that feeling. but i know that -- and we have to look at a lot of things. you know, particularly with the kids, you know, obviously it's something that they can't necessarily control, but the parents, yes, i agree. i think we have to come up with a platform. i didn't see it in the republican party. there was no platform to empower those less fortunate. and i think yes it made it a lot easier for people to support this administration who are disadvantaged. stuart: if you ran the the republican party, what would you tell them to do right now? >> well, pretty simple, change their brand. i mean, we all know, you've got a great crew, very informed, sometimes you have to change the brand by saying hey, this is new and improved. you have to be more inclusive. i didn't like the tone at all in the republican party. it was all, you know, this group is doing this.

this group is doing that. there was nothing to engage people. i didn't see it at all. you look at the republican conventi convention. you see the democratic national convention, you see a lot more diversity. the republican party is in danger of being a permanent minority if they don't get their act together. stuart: we appreciate you being with us. come and see us again soon. thank you, lawrence. >> thanks for having me. stuart: let's get to another new at 10:00 story. speculation of new cabinet positions, john kerry, the secretary of defense, and susan rice, the secretary of state. the same susan rice who says this five day service the attack on the u.s. consulate in benghazi. >> the best assessment we have today is that in fact this was not a pre-planned pre-meditated attack. that what happened initially was it was a spontaneous reaction to what had just transpired in cairo, as a consequence of the video. stuartt we know it was indeed a

planned terrorist attack and all reports indicate that the white house knew that at that time as well. now, these reports are in the washington post. look, david, speculation, i mean they are trial balloons. if they are speculating about susan rice becoming secretary of state, that's way out there. david: this story has not begun to crack. jennifer griffin has done incredible reporting for fox news channel, specifically about what was happening. we knew days before the attack that they were planning an attack. general petraeus knew it. the state department knew it. it was passed all the way down the line. the cia annex in benghazi, a lot of people think what were the terrorists doing, it is the largest cia annex in north africa they were housing prisoners that were being interrogated by cia operatives. this is reason for the attack. jennifer griffin has reported this based on good resources. that's why the attack happened.

the petraeus affair ended months ago and had been known about since the summer of 11 may have been created to prevent petraeus from testifying this week. stuart: why float susan rice as the next secretary of state? >> they are hoping that the lies and the videotape are going to cover up what was really going on, which was an attempt to prevent people from not finding out about what was happening in the cia annex in benghazi. it's a huge story. fox news is just beginning to crack it open. when it does, i don't think susan rice has a chance of being secretary of state. charles: you know what? stuart: you agree? charles: i disagree on one thing, ttough. i wouldn't be surprised if she ultimately gets the job. i think they say listen, we are going to throw you under the bus, you survived, and you will be rewarded. i wouldn't be surprised. david: do you know how many tapes will be repeated even on n

the main stream media? charles: it didn't do anything during the election. i think the masses right now in this country aren't listening to the subject. stuart: i've got big corporate news here. a key executive is out at microsoft. the company hit video game halo 4 sold 220 million of the game on its first day. robert scoble used to work at microsoft. what does he think about the future of the company? the stock is way down today. down more than a buck. he joins us at 10:45. nicole, where is microsoft right now? please, everybody, remember, i own it. nicole: you own it.. it's down 4%. stuart varney is losing money today f. he's grumpy, please excuse him -- if he's grumpy please excuse him. when you have a person stepping

down after he was there so many years, it's not a good sign. stuart: he was the windows guy, couple of weeks after windows 8 appears, he's gone. that's a signal from a lot of people that maybe windows 8 is not very good. nicole: i wouldn't disagree with that. we're speculating, but they are saying that the decision was mutual. stuart: we will look back at it. still down 87 cents. thank you very much nicole. the dow is up 34. general david petraeus his fall from grace started over just one e-mail sent by his misstress. here's the question, how much access does the fbi have over your personal e-mails? all of them? the judge is next.

stuart: he's been re-elected, so obama care will remain the law of the land. companies have to figure out how to deal with it. first wal-mart says it will have to raise the premiums its employees pay for healthcare insurance. many employees say they can't afford it. and may have to drop coverage which could force them into public plans. papa john's is facing a backlash, its chief warns he may have to cut working hours to save on health insurance because part time workers don't need to be covered. you don't want to upset your customers. backlash, here it comes. it's true. look at the broader market now, the dow industrials up nearly 50 points. there's a switch.

goldman sachs chief blankfein says he expect as deal on the fiscal cliff. he says he would be shocked if we didn't get one. maybe that's why the dow has now turned positive. hold on everybody, 90 seconds, e-mails, privacy, and the judge. i always wait until the last minute. cacan i still ship a gift in time r christmas? yeah, sure you can. eat. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery.

stuart: i have a news alert for you. european finance ministers meeting in brussels have decided to give greece until 2016 to reform its economy, a couple more years, why noo, after the initial two years by the way. the finance ministers could not

agree on how to pay for the extension or for when the country's debts would reach a manageable level. the script says the saga continues. it certainly does. the entire david petraeus scandal started when jill kelly asked a friend of hers of the fbi to look into threatening e-mails that she was receiving. it is believed that those e-mails were coming from paula broadwell. and from there this whole situation just flat out exploded. it is like pulling one thread and the whole sweater unravels. it all started with e-mails. one complaint about you and your e-mails are out there. all rise, judge andrew napolitano, author of the new book, look at it, look at it and weep. theodore and woodrow. we will get to that this a minute. >> why do you say weep? your name is in that book. stuart: if i write a letter to someone and there's a suspicion of impropriety, then the authority cans open that

letter -- authorities can open that letter, read it and seize it. if i write an e-mail to someone, there's a hint of impropriety, they can go after every e-mail i have ever read or wrote. >> let me take you a step back. there's a federal statute that prohibits the government from reading mail without a search warrant. the government can't get anything that is arguably private or personal without a search warrant. in the case of mail, there's an actual statute prohibiting them from doing so without a search warrant. the same is generally the law for e-mails. i say generally because there's a lot of exceptions to it, none of which apply here. but the category of exceptions has to do with financial documents that are also in the possession of a bank. we're talking about personal e-mails. we're talking about what might be -- another generation might have called love letters. can the fbi get them? there's limited ways the fbi can get them. first, they can get a search warrant. in order to get that, it has to go to a federal judge and show evidence of a crime.

second, they could write their own search warrants under the patriot act. in order to do that, they have to certify in a file in the fbi that this is an investigation for terrorism. hardly the case here. thirdly, they can just hack into the cia's computer or whatever computer server general petraeus was using at that time and hope that they don't get caught doing it. there's no other way that they could have done it. stuart: but you can legitimately go after every single e-mail e change. thousands of them. >> well, no, you have to meet certain conditions. those conditions are crime or terrorism. stuart: do you have to have a special search warrant to go after each e-mail? there were thousands of them between a top general in afghanistan and this lady. >> you do need a search warrant for each person. they would have to have gone to a federal judge and said there's probable cause of crime here. federal crime and of the the

magnitude that the fbi investigates. do they investigate minor harassment? are they going to investigate that? charles: judge from what i read, when petraeus's name popped up, that changed the whole thing. in other words national security entered the discussion. that changed the whole dynamic. >> that is a facade in my view for the age old rivalry between the fbi and the cia. aside from the military, the two most powerful entities in our country. they each employ lethal force, and they often both operate below the law. one loves to poke the elbow into the ribs of the other. the fact that general petraeus was having an affair, as david points out, generally known by high ranking military, high ranking government officials, and his own staff, hardly subjects him to blackmail when half of washington knew about it already. stuart: i think i'm not making my point. if there's suspicion of

improprietary in an e-mail exchange -- >> that's not enough to justify the government getting it. stuart: if i'm suspected of something, and the government comes and looks at thousands of e-mails. >> let me ask the question differently. if you send one e-mail to me for which the fbi can get a search warrant, does that open up all your e-mails? stuart: yes that's the question. >> that's a very interesting question. it's called the fruit of the poisonous tree. we're not getting into what it means. the new e-mails would have to be directly connected for the ones which they got the search warrant. david: you are saying you are not allowed to do the fishing expeditions hoping to get something incriminating but doesn't that happen all the time? >> absolutely it does. and the fbi's fingers will not get burned unless they want to use that evidence in a prosecution and a judge excludes it. if they are not going to use it in a prosecution, if they are going to use it to drive somebody from office, their fingers will get burned in the editorial pages but not in a courtroom.

stuart: two points, if i write a letter -- >> you are the only one that writes a letter. stuart: i can burn it, can't sni there's no trace -- i can burn it, can't i? there's no trace. you can't do that in an e-mail. where's my name? >> in the acknowledgments, you prodded me and challenged me. stuart: is that the index in the back? >> there's a section called acknowledgments. i'm sure it's there. stuart: i'm looking for varney. david: you have a show with your name on it. why do you need to find your name in a book? why? stuart, you are nuts. >> five minutes of my day right here. stuart: where's my name? if you have to kill a break, kill a break. i want to know where my name is. >> i will find it in acknowledgments. stuart: meanwhile, i will read the tease. i'm saying there is a deal coming on the fiscal cliff, and it means two things, higher taxes and more debt. are you ready yet? >> yes. stuart: where am i? >> my close fox colleagues

blank, blank, blank and stuart varney. dd oh my goodness. -- >> oh my goodness. stuart: page 278, thank you very much indeed. my take is next.

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>> people stood in line for eight hours to vote. because their voices had not been heard. and they want their voices heard. which is why the campaign hasn't

really ended. i think one of the mistakes in the first term of the obama administration was they had this great grassroots organization that got him elected but you needed to put them to work to get legislation passed. stuart: kind of wishful thinking there from mary anne marsh in our last hour. tune in sharp, 9:20 you get it all. a new report says the u.s. could be the world's top oil producer in ten years but with four more years of president obama's green robert brice from the manhattan institute coming up. he will be with us at 10:35. what happens if we don't get a deal on taxes and spending? a recession, according to government bean counters, that is. and a downgrade for our debt. that's according to moody's. that's a lot of pressure to get an agreement. so here's my take on the deal i think we will get. point one, higher tax rates on

high income earners. that's what the president wants, and he has the clout to make it happen. i also suspect he wants to punish wealth, you've got it, you have been lucky, spread it around to us, we won the election, pay up, and by the way, we don't really like you. number two, a deal will likely include the promise, promise of spending cuts, down the the road. cuts to the military will definitely happen and soon. but cuts to social spending will be on the horizon, a very distant one, and always subject to change before the ax actually falls. we have seen this before. tax now, promise to cut later, when you're out of office. point three, that means a lot more debt. the president's own plan brings the total debt to 20 trillion in 2016. so we're piling it up by an extra 1 trillion a year. sum it up, i think there will be be a deal. it will raise tax rates. promise to cut spending. and then pile up the debt. you know, wall street might like

it. at least a deal removes some uncertainty. but how about you? tax, spend, go further into debt? is that the america that you want? ♪ [ engine revs ] ♪

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leaders and far left activists. that will be ahead of his meeting on friday with some congress people. they are trying to figure out what to do with the fiscal cliff. joining the company now from chicago is larry levin, with trading advantage. larry, it seems to me, and i'm making a judgment here, it seems to me that the president is going down the same old road, raise taxes, promise to cut spending in the future, and don't worry about the debt when it goes up.% if you agree with me, how do you as a trader trade these markets? what does it mean for the markets? >> [no audio]. stuart: we've just lost the signal folks. i think it was a good question. we haven't gotten him back. the u.s. is sitting on potentially huge amounts of natural gas. to get it you have to do hydraulic fracturing, blasting water and some chemicals into

shale rock. the process has been blamed for some pollution. will the obama administration allow it? joining us no is robert bryce from the manhattan institute. you are our expert on all things energy. will the obama administration take the plunge and say yes, get out there and frack? >> stuart, i think they already have. if you follow what the president has been saying, and you look at the trends in the oil and gas sector, where last year we had record natural gas production, just yesterday the iea said that the u.s. could surpass the saudis in oil production within five years. the obama administration is on record supporting hydraulic fracturing and recall when the president at the democratic national convention, he mentioned jobs one time, and the industry that he mentioned when he talked about jobs was natural gas. stuart: isn't that -- the fracking that we're doing in america, isn't that taking place on private land, which is not subject to federal regulations? and if you try to do it on

federal land, you can't do it because of the regulations imposed by the obama administration. >> well, earlier this year, stuart, the obama administration and the interior department, to be more specific, did issue a proposed rule that would require disclosure of the chemicals used in hydraulic fracturing, when drilling is done on public lands. but my bottom line here is that it's cheer the epa -- it's clear the epa, the interior department may impose some more regulations on drilling both nationally and on federal lands and so on. but it cannot and will not stop all the momentum that's happening in the upstream oil and gas sector. it's just too big. stuart: i wasn't expecting you to say this, but you're basically saying yes, fracking is here, it stays, it expands an will be the method by which america overtakes saudi arabia in oil production in the year 2020. it's going to happen? >> there's no question, stuart. the developments in the u.s. oil and gas industry that have happened in the last four years,

the development of and perfection really of extended drilling and hydraulic fracturing, the most important energy development in the u.s. and i would argue the world since the discovery of the east texas field in 1930. kudos to obama, he gets it and not trying to stop it. new york state, that's a different story. david: robert, i want to ask about the epa. talking about the interior department. one of the problems with the epa is as stuart mentioned it is new restrictions on the fracking process. and it wants to supplant state regulators, every state has its own version of the epa. the feds want to big foot the state regulators to prevent the kind of fracking that's leading to the developments you were talking about. don't they? >> they do, well, look, that's not clear that the epa wants all of that report. the industry clearly wants -- david: hold on a second, what gives you any indication that that's true? the epa has been extending its authority every chance they get. >> sure. sure. but the reality is the states are doing a good job, and the

industry to its credit is already doing a lot of the disclosure that the environmental groups want. so think the epa is mindful of what the economic boom that's underway. remember, obama won in ohio and pennsylvania. those are two states who that are absolutely critical for his election but also the states that oil and gas development is really booming. charles: he didn't win in those areas where all the jobs are being created. real quick, i guess to your point the administration will use the threat of epa to probably shake down the natural gas industry for more money, isn't that the bottom line? >> well, perhaps. look, i think what's going to happen, we're going to see some modest increase in regulation, both at the state and federal levels. both are likely. but again, what we're seeing already is such incredibly positive news, such incredibly positive news for the economy, for jobs, for balance of trade, that the obama administration would be foolish, absolutely insane to try and stop it. stuart: it's ironic isn't it

that fossil fuels and natural gas is a fossil fuel could actually bail out the obama administration on jobs and the economy. that i find fascinating. but it's correct, isn't it? that's what's going to happen. >> well i think it is already underway. quick fact stuart. four years ago today nat gas was selling for about 6 1/2. today it is about 3 1/2. that reduction is saving the u.s. economy about 200 million dollars a day. that's about 70 billion dollars a year. this is real savings to the u.s. economy. and it's coming at a very critical time. stuart: robert bryce manhattan institute thanks for joining us. >> thank as million stuart. stuart: a top executive out at microsoft. that is really overshadowing the big sales of the company's new game halo 4. a former microsoft employee joins us next what is going on at microsoft? change engineering in dubai, aluminum production in south afca,

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stuart: we have indeed seen a turnaround for stocks this morning. at the moment the dow industrials are up 30 points. goldman sachs chief blankfein saying today he would be shocked, shocked, if we hit the fiscal cliff and went over it. he thinks a deal will be reached before the end of the year. but says we're in for some volatility until then. maybe that turned the market around. maybe. home depot a big winner this morning, 18 billion dollars worth of sales in the third quarter. says it saw a 70 million dollars profit lift before sandy hit. sales of flashlights, batteries

generators and expects a boost coming as well from the rebuilding efforts. microsoft down big, i own the shares. i need to remind you. the head of windows unit leaving, outweighing strong sales of halo 4. robert scoble, a former microsoft employee, we're going to ask him about those big changes at microsoft. why is the guy who does windows just gone? why?

stuart: i want to go back to nicole because i believe there's more bad news for jc penney. that stock is down again?

nicole: that's right. you have fitch downgrading jc penney just talking about whether or not the damage that's been done so far to jc penney, whether or not that's irreversible, and they have this every day value strategy, no more sales, no more coupons since ron johnson came in from apple. so you have fitch downgrading the company. not good news there. there's also been some headlines in wires -- talking about the fact that he's been disappointed in the results of jc penney. stuart: you told it straight. thank you very much for nicole. microsoft's latest video game brought in 220 million dollars in global sales on the day it was released. it's generated nearly 3 1/2 billion dollars in revenue for microsoft since halo was launched in 01. that is a lot of money. but overshadowing that positive news, the head of windows,

suddenly quit. he had been working there for 23 years. he was supposedly next in line as chief executive. joining us now is robert scoble, a former microsoft employee. robert, tell me the significance of mr. sinofsky just leaving suddenly. >> it's absolutely huge. i've called all sorts of microsoft employees and talked to people up in seattle who are tightly aligned with the company and they are shocked. they didn't see this one coming. steven was seen as the guy who could ship products. this is the guy who shipped products. he shipped office. ran office. ran windows and turned it around. stuart: the fact that he's gone two weeks or whatever it is after the release of windows 8, the fact he's gone so suddenly right after it's released, that implies to a lot of people that windows 8 is not a success. >> yeah, i think that's

overreaching -- reading what's going on here. from what i'm hearing, you know, my friends and i have talked about steven a long time, there are a lot of people who really hate steven sinofsky, they got rolled over or he denied their product, whatnot. but there's a lot of people who really love him inside the team and they say that working for him is a joy for the first time at microsoft because they could actually ship product and get through the bureaucracy that had built up at microsoft. stuart: it occurs to me that two of the biggest names in technology, you've got turmoil in the executive suite. same thing is happening over at apple. couple of very seeior guys, very highly-respected guys, people who introduced this extraordinary range of new products, they are gone, suddenly. they are out. and now microsoft does the same thing with the guy who ran the windows unit. both of those stocks by the way are way, way down. i'm surprised that a corporate executive suite changes makes

such a difference to behemoth companies like this. >> well, you know, people who aggregate power inside these companies can get a lot of stuff done, and they can block a lot of innovation too. i think both companies now are more interesting today because of these moves. it will be interesting to see if they can get a cadence of shipping going and what will happen when that power vacuum gets filled up? stuart: the bottom line is robert that you are not a fan of microsoft in any way shape or form and you are a big fan of apple. that's where it still stands, isn't it? >> yeah, i still am a big fan of apple. but i am turning a bit, i think what microsoft has done over the past -- with windows 8, particularly, is quite positive. it's certainly better than doing nothing. and they are back on the playing field with a product that most people are finding pretty good. stuart: that is the most

grudging positive about any company and its products that i have ever -- like pulling teeth. >> i still wouldn't invest in them. but i have been telling you that for three years. stuart: very funny. thank you very much, robert. >> put it into google, man. stuart: i know i'm losing a fortune here. that's all i know. charles? charles: if anybody goes by one of these fake microsoft/apple stores, the stores that have been popping up, you would probably sell your microsoft. it is embarrassing. david: i saw the surface, it is a terrific product. you bought one? charles: i had no choice, i was stuck in california. had to work. david: do you like it? charles: i'm learning it, 50/50, but the service was terrible. stuart: anything positive from charles payne about microsoft is again pulling teeth. president obama's first fiscal cliff meeting starts in the next

hour. labor leaders and left-leaning advocacy groups are in attendance. are any of them calling for us to go over the cliff? i have an answer for that in a moment.

stuart: a little more than a half hour from now, president obama meets with union leaders and leftist activists about the

fiscal cliff. rich edson is at the white house. all right, rich, are any of these people attending these meetings, this meeting today, are any of them saying yeah, go over the cliff, big tax increases and big spending cuts, that's what we want, anybody there saying that? rich: stuart, there is representation from the center on budget and policy priorities. a couple of months ago this group released a report saying if democrats and policymakers could not get concessions on tax increases and other concessions, then it would be best to allow the fiscal cliff to hit so they could get a better deal in january or february. they argue that it is not a cliff. it is more of a fiscal slope that will gradually hit the economy. stuart: that's not the less policy, go over the cliff, please, tax, taxx tax and cut spending, that's not their policy, that's a suggested negotiating position if they can't come to a deal, that's it, isn't it? rich: absolutely. the other labor groups are looking for tax increases on the wealthy and they don't want the president to deal anything on

entitlements. stuart: that is the bottom line from this meeting, tax the rich, raise tax rates, i think that's what's coming out of the meeting. how about you rich? rich: i agree. that's their position. tax rates to go up in the top 2%. don't touch entitlements. stuart: rich edson thank you very much. the los angeles city council passed a new regulation meet this monday in a unanimous 12 to 0 vote. the city council approved a resolution that encourages l.a. residents to not eat meat one day out of the week. this comes as an attempt to cut back on meat for health and environmental reasons. now they are flat out broke and they want to change our lifestyle in los angeles. you're shaking your head? david: because, you know, i'm so sick of liberals who claim they are working on our behalf when in fact they're doing exactly the opposite of what we want. i am the best judge of what i want. not some idiot bureaucrat sitting down at city hall or in

the statehouse or in the white house. i'm the best judge of what i want. it makes me furious -- it makes me furious that these people want to take over what i want. they want to program it according to what they think is right what they think is proper and i'm fed up with it. absolutely fed up. stuart: charles? charles: by the way, california, america, the world, i mean really. they think there's maybe five or six people who know better and they should hand down these to us. i can't wait until the next time i'm out there because i'm going to eat a burger in front of everybody. david: smoke a cigar afterwards, as well. [laughter] stuart: i will bail you out of prison. okay? the highlight reel is next. [ male announcer ] thiis steve. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the marke he goes with people he trusts,

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stuart: here it is. the highlight reel. >> in that acknowledge vince.

they challenged me. stuart: is there and index in the back? [ laughter ] >> stuart, you are nuts. >> my fox colleagues, blank, blank, blank and stuart varney. stuart: why are you laughing at me? >> why? are you kidding me? what is this show called? stuart: varney and company. >> don't you have enough of your name? >> with a name like asman, i am a little envious. stuart: my colleagues, david

asman, you are in there. stuart varney. this book and my on-air work as well. >> we should not overlook the fact that this is a good book. they think they know what is better for the people they love people themselves do. stuart: the subtitle, charles is theodore and would roll out american residents destroyed constitutional freedom. the judge is not here to defend himself or his book. we will say this for another day. >> what is the name of this book -- show again quixotic. stuart: varney and company. remember